How Doctors and Dentists Invest Their Money

By Michelle Clardie on 02/27/2023.
Reviewed by Dan Gatsby .
Doctors and dentists face unique financial challenges and have unique investment opportunities. After years of medical or dental school, most doctors and dentists enter their careers with a negative net worth. Not only have you missed out on some of the early earning years of your peers, but you likely had to take on sizeable debt to complete your education. So your liabilities exceed your assets, and you have a bit of catching up to do. 

The good news is that doctors and dentists are high-income earners. Once your career is established, you should be able to take advantage of high-net-worth investing strategies to make up for your slow financial start. Of course, making money isn’t enough to boost your net worth. If you want to grow your wealth, you need to put your money to work through smart investments.     

So, how do doctors and dentists invest their money?

Here are seven of the best ways for doctors and dentists to invest. 

1. Self-Development

As a doctor or dentist, you’ve already made a substantial investment in yourself. Your years of university, followed by medical or dental school represent an impressive investment of time and money. It’s important to continue investing in yourself throughout your career to maximize your earnings potential. 

Attending seminars, workshops, and conferences is an investment. As is staying current with your medical journals and taking continuing education courses. 

One self-development investment that deserves more credit is investing in avoiding burnout. These demanding professions can create stressors that shorten careers, thereby limiting income potential. So taking care of your own mental and physical health is critical. Massages, gym memberships, vacations…consider these investments in improving your productivity and prolonging your career. 

2. Paying Down Student Loans

According to, the average medical school student graduates with $200,000 to $215,000 in total educational debt. Depending on your loan types and when you graduated, you could be paying over 7% interest on some of your student loans. 

Many doctors and dentists choose to invest a percentage of their income to pay down their student loans faster than scheduled to reduce the total interest expense over the term of the loan. 

3. Partnerships and Private Practices

There are multiple ways to have ownership over your business. You could start your own private practice, for example. Or buy into a partnership of physicians or dentists. You could also join an existing practice with the intention of taking over the practice when the current owner retires. Once your own practice is well-established, you could even buy a tertiary business (like an imaging center or lab).

As a business owner, you have more responsibility, but you also enjoy more control. And ownership pays off financially as well. In addition to drawing your own salary from your practice, you’ll have additional profitability potential based on how you manage your expenses and operations.  

4. Stock Market Securities

Most doctors and dentists are invested in the stock market. Some may hold individual corporate stocks and bonds, but many investors recognize the benefit of index funds as a solid long-term investment option in the stock market. Index funds are bundles of stocks and bonds from multiple companies that follow a specific index (like the S&P 500, for example). When you buy a share of an index fund, you’re investing in dozens or even hundreds of companies. This provides some automatic diversification for your investment portfolio. If one company underperforms, the gains from the other companies help to offset the poor performer, making your portfolio more resilient.  

Similarly, mutual funds are bundles of stocks and bonds that are hand-picked by a fund manager. However, these funds historically provide lower returns than index funds because of the higher fees. So general wisdom is to go with index funds over mutual funds. 

Another appealing option is a REIT. REITs are companies that invest in income-producing real estate and share the profits with investors via dividends. Like index funds and mutual funds, REITs provide automatic diversification. But because REITs focus on dividends, they can provide cash flow, which you can reinvest to acquire more shares and boost your holdings.

These stock market securities are a good option for holding some of your long-term investments. Your retirement accounts, for example, could invest in index funds. This allows you to take advantage of stock market gains and compound interest to grow your wealth with very little active management on your end. 

5. Direct Real Estate Ownership

Buying your own home is a common investment among doctors and dentists. Instead of wasting money on rent, you’ll be building equity in your home. You’ll also benefit from appreciation over time, as well as tax breaks made available to homeowners.

A natural next step after buying your own home is to invest in rental properties to generate passive income. Whether you rent out a single-family home, a duplex, or a multi-family building, you’ll benefit from regular rental income in addition to the tax breaks and appreciation you receive on your primary residence. 

The one potential drawback of direct real estate investing for doctors and dentists is the time required to manage the properties. Well-maintained buildings with reliable long-term renters may require very little time or effort to manage. But you will inevitably have a vacancy to be filled or a maintenance emergency at some point. If you are concerned that your busy career won’t leave time for managing your rentals, you can always hire a property manager to handle the day-to-day for you. Or you could consider the next item in our list of ways doctors and dentists invest their money: real estate crowdfunding and syndication.      

6. Real Estate Crowdfunding and Syndication

Real estate crowdfunding and syndication are two of the best methods of investing in real estate without buying property. The models for crowdfunding and syndication are similar: a project sponsor will pool funds from multiple investors for a real estate investment. The sponsor will professionally manage the project and disburse proceeds back to the investors in accordance with their agreement. Real estate syndication is a special type of crowdfunding with a more stable ownership structure for investors.

The crowdfunding and syndication models provide several advantages for doctor and dentist investors:

  • The investments are passive. As a busy professional, you may not have the time to manage real estate investments, but that shouldn’t prevent you from taking advantage of the housing market.
  • Each project is professionally vetted. You don’t have to worry about running financial projections or handling complicated real estate analyses. Once you find a crowdfunding service you trust, you can simply choose from their expertly-selected projects. 
  • Low minimum investment amounts. By pooling funds from multiple investors, you gain access to high-value deals without shouldering the entire upfront investment yourself. 
  • Diversification potential. Let’s say you are investing $100k in real estate. With a direct real estate investment, you might have to put that full amount into one or two properties. But with syndication, you could potentially put $20,000 into each of five properties.
  • Flexibility. You could invest in a short-term fix-and-flip that would allow you to get in and out of the investment in as little as six months. Or you could invest in a multi-family rental that generates passive income for five years or more. You can even get in on multi-family development projects that you would never have the time to manage on your own! 

7. Alternative Investments

As high-earners, doctors and dentists often have funds available for alternative investments as well as the traditional investments we’ve covered so far. 

Alternative investments cover a wide range of asset classes from commodities to collectibles to tax liens. Some, like cryptocurrency, are highly speculative; you might double your money, or you might lose it. Others, like precious metals, are known for holding their value.

Alternative investments offer a unique opportunity to dramatically diversify your investment holdings.

What to Watch Out for Investing as a Doctor or Dentist

Understanding how to invest as a doctor or how to invest as a dentist requires knowing about a few common investment pitfalls, including

  • Investment scams. As high-earners, sophisticated scammers may target you. Before investing, always check the track record of the firm you’re investing with or the seller you’re buying from.
  • Capital gains tax. Capital gains tax is a tax placed on profits from investments. The capital gains tax rate is less than your earned income tax rate, but some investors forget to factor in these taxes and run into a cashflow issue when the tax bill comes due. It is worth noting that capital gains taxes from the sale of real estate can be deferred by using a 1031 exchange.   
  • An unbalanced asset allocation. It’s easy to accidentally put too much of your wealth in low-risk, low-return investments. It’s also easy to put too much into high-risk, high-reward assets. You need to take some risk to grow your wealth, but you also need to keep some of your funds safe so that you know the cash will be there when you need it. Generally, you can afford to take greater financial risk with long-term investment earlier in your career, then move more of your portfolio into lower-yield investments as you near retirement.

Consider Real Estate Syndication Investing with Gatsby Investment

As a busy medical professional, you may not have much time available for researching, analyzing, or managing investment opportunities. By partnering with a reputable investment company, you can grow your wealth passively while focusing on your important work.     

Here at Gatsby Investment, we specialize in real estate syndication projects with high-yield potential. If you are looking to invest in real estate without the hassle of finding your own deals, supervising contractors, or managing renters, consider investing with Gatsby. We offer a wide range of investment opportunities, including short-term developments and long-term rentals, with annualized return potential in the double digits.

With Gatsby, your money will work almost as hard as you do!

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